Rishabh Software Pvt. Ltd, Vadodara V. DCIT, Circle-2(1)(2), Baroda

ITA 351/AHD/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9059 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-05-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 13-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Unexplained cash credit; Question of law
• Section: 133(6); 43; 48; 22; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ./ ITA NO. 351 /AHD/2018 / ASSTT. YEAR: 2013 - 2014 RISHABH SOFTWARE PVT. LTD. , PLOT NO.66, BESIDE SIGIL INDIA , PADRA ROAD , ATLADARA, VADODARA - 390012. PAN : AAACR9028G VS. D .C.I.T. , CIRCLE 2(1)(2) , BARODA . (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI MUKUND BAKSHI , A.R REVENUE BY : SHRI DINESH SINGH , SR .D. R / DATE OF HEARING : 27 / 11 / 2020 / DATE OF PRONOUNCEMENT: 04 / 01/2021 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE A GAINST THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) - 2 , VADODARA , DATED 14 /11/2017 ( IN SHORT LD.CIT (A) ) ARISING IN THE MATTER OF ASSESSMENT ORDER DATED 29/02/2016 PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2013 - 20 14 . ITA NO.351 /AHD/2018 ASSTT. YEAR 2013 - 14 2 2. T HE INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO IN PART BY TREATING THE LOAN OF 22 LAKHS AS UNSECURED CASH CREDIT UNDER SECTION 68 OF THE ACT AND DISALLOWING THE CORRESPONDING AMOUNT OF IN TEREST ON SUCH LOAN OF 1 , 48 , 665.00 ONLY. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND SERVICES. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS TAK EN LOAN FROM VARIOUS PARTIES INCLUDING THE FOLLOWING: I) MS SHIBANI M. DOSHI RS.10,00,000/ - II) MS. EKTA A DOSHI RS.10,00,000/ - III JAYESH P. SHAH(HUF) RS.2,00,000/ - TOTAL RS.22,00,000/ - 3 . 1 T HE AO DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE AFORESAID PARTIES ON THE BASIS OF DOCUMENTARY EVIDENCE. ACCORDINGLY THE AO TREATED THE IMPUGNED AMOUNT OF LOAN SHOWN BY THE ASSESSEE AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE AO ALSO WORKED OUT THE AMOUNT OF INTEREST ON SUCH LOAN AMOUNTING TO 1 , 48 , 665.00 ONLY. HENCE THE AO DISALLOWED THE SAME BY ADDING TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO HAS CONFIRMED THE ORDER OF THE AO. 6. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. 7 . THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 35 AND SUBMITTED THAT THE A SSESSEE HAS DISCHARGE I T S OBLIGATION BY FURNISHING THE NECESSARY DETAILS SUCH AS CONFIRMATION, PAN, BANK STATEMENT WHICH SATISFIES THE CONDITIONS ITA NO.351 /AHD/2018 ASSTT. YEAR 2013 - 14 3 IMPOSED UNDER SECTION 68 OF THE ACT. THE LEARNED AR ALSO SUBMITTED THAT THE ASSESSEE IS NOT SUPPOSED TO JUSTIFY THE SOURCE OF SOURCE IN THE HANDS OF THE PARTIES. 8 . ON THE OTHER HAND THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE INITIAL ONUS IS UPON THE ASSESSEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MISCHIEF OF SECTION 68 OF THE ACT. THESE ARE: (I) IDENTITY OF THE INVESTORS; (II) THEIR CREDITWORTHINESS/INVESTMENTS; AND (III) GENUINENESS OF THE TRANSACTION. 9 .1 THE DEPARTMENTS EXERCISE STARTS ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE, BY THE ASSESSEE AND THE DEPARTMENT IS REQUIRED TO INVESTIGATE INTO THE FACTS PRESENTED BY THE ASSESSEE. AS PER THE STATUTORY PROVISION OF SECTION 68 OF THE ACT AND JURISPRUDENCE OF THE HON'BLE COURTS, IT IS CLEAR THAT THE PRIMARILY ONUS IS ON THE ASSESSEE TO DISCHARGE THAT THE CREDIT RECEIVED BY IT IS FROM THE SOURCES WHOSE IDENTITY CAN BE PROVED, THE GENUINENESS OF TH E TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITOR IS PROVED BY DOCUMENTARY EVIDENCE. IF THE ASSESSEE PRESENTS ALL THESE DETAILS DURING THE ASSESSMENT PROCEEDING BEFORE THE AO, THE RESPONSIBILITY SHIFTS TO THE AO TO PROVE IT WRONG. IF AO ACCEPTS SUCH E VIDENCES WITHOUT PROVING IT WRONG, IT CAN BE SAI D THAT ASSESSEE HAS DISCHARGED I T S ONUS. IF AO PRESENTS SOME CONTRARY EVIDENCES, THE RESPONSIBILITY AGAIN SHIFTS UPON THE ASSESSEE TO REBUT SUCH CONTRARY EVIDENCES. 9 .2 ADMITTEDLY, IN THE CASE ON HAND, THE A SSESSEE HAS DISCHARGED ITS PRIMARY ONUS BY FURNISHING THE NECESSARY DETAILS SUCH AS COPY OF PAN , CONFIRMATION OF THE PARTIES, BANK EXTRACTS ETC. TO SUPPORT THE TRANSACTIONS. THE NECESSARY DETAILS OF THE PARTIES IN SUPPORT OF THE TRANSACTIONS ARE AVAILABLE IN THE PAPER BOOK. SIMILARLY, THERE ITA NO.351 /AHD/2018 ASSTT. YEAR 2013 - 14 4 IS ALSO NO DISPUTE TO THE FACT THAT ALL THE TRANSACTIONS WERE CARRIED OUT TH ROUGH THE BANKING CHANNEL. THUS T HE INFERENCE THAT FLOWS FROM A CUMULATIVE CONSIDERATION OF ALL THE AFORESAID CONTENDING FACTS IS THAT THE ASSES SEE HAS DISCHARGED ITS ONUS IMPOSED UNDER SECTION 68 OF THE ACT. THE DETAILS FILED BY THE ASSESSEE WAS NOT CROSS VERIFIED BY THE REVENUE FROM THE RESPECTIVE PARTIES DESPITE HAVING THE NECESSARY DETAILS IN ITS POSSESSION. THUS, WE ARE OF THE VIEW, REVENUE C ANNOT GO TO HOLD THE ADDITION UNDER SECTION 68 OF THE ACT IN THE GIVEN FACTS AND CIRCUMSTANCES. IN HOLDING SO, WE DRAW SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CHANAKYA DEVELOPERS REPORTED IN 43 TAXMANN.CO M 91 WHEREIN IT WAS HELD AS UNDER: 9. WE ARE IN COMPLETE AGREEMENT WITH CIT (A) AND THE TRIBUNAL BOTH, WHO HAVE CONCURRENTLY HELD THAT THE ONUS WHICH WAS REQUIRED TO BE DISCHARGED ON THE PART OF THE ASSESSEE RESPONDENT WAS DULY DONE. NOT ONLY THE IDENTITY OF THE PERSONS CONCERNED BUT ALSO THE PAN NUMBERS WERE BEFORE THE ASSESSING OFFICER. IN THE EVENT OF ANY FURTHER INQUIRY, IT WAS OPEN TO THE ASSESSING OFFICER TO MAKE INQUIRY UNDER SECTION 133(6) OF THE ACT. ON ITS CHOOSING NOT TO EXERCISE SUCH PO WERS, IT WAS ERRONEOUS ON THE PART OF THE ASSESSING OFFICER TO MAKE ADDITION OF A SUM OF RS. 23,00,000/ - , DESPITE SUCH COGENT EVIDENCES HAVING BEEN PUT - FORTH BY THE ASSESSEE. BOTH THE AUTHORITIES HAVE CONCURRENTLY HELD THE ISSUE IN FAVOUR OF THE ASSESSEE A ND MOREOVER, THE ENTIRE ISSUE IS ESSENTIALLY IN THE REALM OF FACTS. NO QUESTION OF LAW, THEREFORE, ARISES AND HENCE THIS ISSUE DESERVES NO FURTHER CONSIDERATION. 9 .3 FROM THE ABOVE IT IS INFERRED THAT THE PRINCIPLE, WHICH IS MADE APPLICABLE TO ADDITION UNDER SECTION 68 OF THE ACT IS THAT THE INITIAL ONUS I S ON THE ASSESSEE TO DISCHARGE BY PRODUCING THE EVIDENCE WHICH IS REQUIRED TO ESTABLISH - (I) IDENTITY OF THE CREDITOR; (II) THE CAPACITY/CREDITWORTHINESS OF THE CREDITOR TO ADVANCE THE MONEY; AND (III) THE GENUINENESS OF THE TRANSACTION . ONCE THE ASSESSEE DOES SO , THE ONUS SHIFTS TO THE ASSESSING OFFICER TO MAKE FURTHER INQUIRIES. 9 .4 WE ALSO NOTE THAT THE NON - FILING OF RETURNS OF INCOME BY THE LENDERS CAN GIVE RISE TO THE SUSPICION FOR THE LACK OF CR EDITWORTHINESS BUT THAT IS NOT SUFFICIENT ENOUGH TO DRAW AN INFERENCE AGAINST THE ASSESSEE. AS SUCH IN SUCH SITUATIONS, THE AO SHOULD INVESTIGATE THE MATTER IN DETAIL BEFORE ARRIVING AT AN OPINION THAT THE LENDERS DID NOT HAD CREDITWORTHINESS. ITA NO.351 /AHD/2018 ASSTT. YEAR 2013 - 14 5 9 .5 REGARD ING THE LOAN TAKEN BY THE ASSESSEE FROM SMT. EKTA A. DOSHI FOR 10 LACS, IT WAS CONTENDED BY HER (SMT. EKTA A. DOSHI) THAT SHE HAS TAKEN THE MONEY FROM SHRI ANKEET DOSHI WHICH WAS ADVANCED TO THE ASSESSEE. HOWEVER THE AO HAS NOT BROUGHT ANYTHING ON RECORD TO DISPROVE THE CONTENTION OF THE LENDER. 9 .6 SIMILARLY, THE AO HAD NOT RAISED ANY OBJECTION ON THE COMMISSION PAID BY THE ASSESSEE TO JAYESH P. SHAH (HUF) WHICH EVIDENCES THE AVAILABILITY OF FUNDS IN ITS (JAYESH P. SHAH (HUF)) HANDS. ACCORDINGLY, IT CAN BE INFERRED THAT THE CREDITWORTHINESS OF THE LENDER WAS JUSTIFIED BY THE ASSESSEE. ONCE THE CASH CREDIT GETS EXPLAINED WITHIN THE PARAMETERS OF THE PROVISIONS OF SECTION 68 OF THE ACT, THEN THE QUESTION OF DISALLOWING THE INTEREST EXPENSES DOES NOT ARISE IN THE GIVEN FACTS AND CIRCUMSTANCES. IN VIEW OF THE ABOVE, WE ARE NOT IMPRESSED WITH THE FINDING OF THE LD. CIT - A AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM . HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED . 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE COURT ON 04 /01 / 2021 AT AHMEDABAD. SD/ - SD/ - (MAHAVIR PRASAD ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 04 / 01/2021 MANISH